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Article

Abstract

What is the subjective value assigned to information? Is the subjective value of information similar to the realistic or normative value, or are there deviations introduced by human processing, the framing of the information source, or the external qualities of packaging and ownership of the information? Do people assess information as having the same value when offered the chance to sell it (Willingness to Accept, WTA) as when facing the need to buy it (Willingness to Purchase, WTP)? This is an empirical, experimental investigation of the effects of expertise vs. content, and copy vs. exclusive original packaging of information on the WTA/WTP ratio. In an animated computer simulation of a business game players maximize their profits by making choices regarding inventory and prices. Participants were also offered the chance to bid in trade (buy or sell) information regarding the weather that may affect demand. We find, as hypothesized, that the subjective value of information does indeed follow the predictions of Endowment Effect theory. Participants revealed a ratio of Willingness to Accept to Willingness to Purchase (WTA/WTP) that resembles the ratio common in the case of private goods. In the decisions, choices and performance recorded for the 294 subjects, we also found support for the hypothesis that the WTA/WTP diverges from unity more often and in a more pronounced manner for information traded in the “original” form rather than as a copy of the original, although even for copies the WTA/WTP ratio is still double. Results yield a value of about three for the WTA/WTP ratio for original information regardless of whether the source is content or expertise. Valuations of content and expertise did not diverge. However, the source of information can be manipulated by system design to become more salient. Copy information received a subjective value which was significantly different (lower) than original information. Implications for both online trading and online sharing of information are discussed.

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